Sparrows Point workers told to brace for end to benefits

The United Steelworkers union warned laid-off Sparrows Point workers Tuesday to brace for an imminent loss of benefits.

The steel mill's owner, RG Steel, auctioned off the Baltimore County property last week in a court-ordered bankruptcy sale.

Joe Rosel, president of Local 9477 in Sparrows Point, alerted members Tuesday that the company was proposing to stop paying supplemental unemployment benefits and dental, vision and life insurance. It also proposed to stop paying retiree insurance benefits, he said.

"The banks are putting pressure on RG to end these benefits immediately," Rosel said in a letter to members, noting that the company could ask the court for permission to do so.

Rosel said in an interview Tuesday that he hoped health insurance would last longer than the other benefits, perhaps until the end of the month.

RG Steel officials could not be reached for comment.

About 2,000 people — unionized employees and managers — worked at the plant until it was idled following RG Steel's May filing for bankruptcy protection. Before that, the mill had been one of the largest private employers in the county.

Missouri redevelopment firm Environmental Liability Transfer was the high bidder for Sparrows Point, offering $72 million — less than a tenth of what the mill sold for in 2008. The company said it was doing a joint venture with liquidation firm Hilco Trading, but neither company has publicly explained its plans for the property.

RG Steel disclosed in a court filing Tuesday that six qualified bidders were at the Sparrows Point auction, largely redevelopment and demolition firms. A company named SB International Steel was among those named, but it was unclear late Tuesday whether it was Dallas steel distributor SB International Inc.

The sale isn't final unless a federal bankruptcy judge approves it. A hearing about the auction is scheduled for Wednesday in Wilmington, Del.

State and federal environmental regulators have urged the court to make clear in any sale order that the new owner will be bound by a 1997 consent decree requiring the then-owner to find and fix contamination on the property. But RG Steel argued in a court filing Tuesday that it is "well-settled" law that a buyer in a bankruptcy sale situation does not shoulder "environmental liabilities accruing prior to the transfer of the property."

As benefits for rank-and-file workers disappear, top RG Steel officials could be getting bonuses — though how much is unclear. Last month the court approved an incentive package worth up to approximately $20 million for 10 RG Steel executives, but some of the payments were contingent on sales of facilities to buyers intending to operate them.

Both the union and Baltimore County officials say they are working to find a buyer that does want to operate Sparrows Point. Hilco indicated to RG Steel that it would preserve key steelmaking assets at the mill for six months, which would provide a window of opportunity for those who believe the short period that buyers had to prepare for the auction was the problem — and not the mill itself. RG Steel held the auction only 10 weeks after filing for bankruptcy.

"The … timetable proved to make it impossible for the major strategic steel producing companies to put together a package of this size to purchase us," Rosel said in the letter to members.